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Publicado en: Documento de trabajo

Should the government provide public goods if it cannot commit?


Documento de Trabajo IE-PUC, N° 538, 2019.

Abstract: I compare two di⁄erent systems of provision of binary public goods: a centralized system, ruled by a benevolent dictator who has limited commitment power; and a decentralized system, based on voluntary contributions, where agents can communicate but cannot write contracts. I show that any ex-post individually
rational allocation that is implementable by the centralized system is also imple mentable by the decentralized system. This suggests that when the public good
provision problem is merely an informational one, as is the case with binary public goods, a decentralized system may perform better.

JEL classication: D82, H41
Keywords: communication, free-riding, commitment power, voluntary provision of public goods


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